State looking at increased fuel taxes

Bills introduced to the state House last week may have drivers paying more for their gasoline and diesel purchases.

State Rep. Richard Ball, R-Bennington Township, and State Rep. Pam Byrnes, D-Lyndon Township, have proposed three bills that would raise fuel taxes over the next three years and create a commission to decide how to maintain consistent revenue to repair Michigan roads. They hope the bills will be discussed in the next couple of weeks.

Michigan has 92 percent of its federal gas tax refunded each year, which totals hundreds of millions of dollars, Ball said. Each year, the federal government refunds a portion of gas taxes to be used for improving road conditions, but requires the state to put money into that fund as well. Unless Michigan is able to come up with $100 million this year to match the federal funding, the state will only receive 50 percent of the refund.

“With just the money that is available now and the revenue that is coming into the state by the federal fuel tax, we will not have the money to match the federal money,” he said. “They’ll just take that and spread it over other states.”

The proposed tax increase, effective immediately after the bill passes, would raise gasoline taxes to 23 cents a gallon from 19 and diesel fuel to 21 cents a gallon from 15. Then both fuels see a final tax raise to 27 cents a gallon in taxes on Jan. 1, 2013.

Based on the increase, a car that gets 20 miles per gallon and goes 15,000 miles a year would pay an additional $2.50 per month with 23 cent tax, Ball said. This would bring the amount in taxes up to $14.38 per month on gas taxes.

Another Option

The alternative is an increase in vehicle registration fees. But that method will take a year to cycle through all tax payers and will not solve the potential deficit in time, Ball said.

“I’m not sure that tying it to the gas tax is the best solution to the problem,” said state Rep. Bill Caul, R-Mount Pleasant. “There are going to be more efficiencies, and as prices go up people are going to drive less. And we may earn even less.”

One selling point of the bipartisan bill is the proposed clarity. Every dollar is to be reported for, and those reports are going to be available to the public, Ball said.

Ten percent of the bill is designated to go to county bus routes and other public transportation. The other 90 percent is to be divided between Michigan and interstate highway maintenance and also distributed to county, city and village road commissions.

“I’ve heard that it is supposed to be a nonprofit thing,” said Fran Wilson, manager of Next Door Store, 629 S. Mission St. “But, as far as I can tell, it’s just another profit center; I don’t believe in it.”

Wilson’s sales are already down in the Mount Pleasant area over the last year, and she frequently receives complaints her gas prices are higher than those of gas stations in other areas.

Faith Primm, manager of Marathon Next Door Store, 1041 S. Mission St., also would be opposed to raising the gas prices and the negative impact it would have on her store.

“We’ll pay it, but I just don’t think it will be good for the economy,” Primm said.